The Dynamics of Unemployment, Capacity Constraints and Demand Shortages
AbstractThis paper presents an intertemporal model in which the agents may face different quantity constraints resulting from technological rigidities, microeconomic uncertainty and market segmentation. Its main purpose is to derive the path of the unemployment rate, the rate of capacity utilisation and the proportion of firms reporting demand constrains from a union-firm optimisation programme. The model is calibrated and the impact of different unfavourable shocks is simulated using a new algorithm for solving dynamic non-linear models. The present exercise outlines how cautious the interpretation of business survey indicators should be.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1994013.
Date of creation: 01 May 1994
Date of revision:
dynamic contracting model; unemployment; rate of utilisation of capacities; demand shortages; aggregation; putty-clay;
Other versions of this item:
- David DE LA CROIX & Jean-François FAGNART, 1995. "The Dynamics of Unemployment, Capacity Constraints and Demand Shortages," Annales d'Economie et de Statistique, ENSAE, issue 37-38, pages 441-463.
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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